Apple demands India not to hike import-tax on iPhone parts
In a bid to expand its iPhone-manufacturing in India, Apple has reportedly asked the government not to increase the import taxes on mobile phone components. However, the Centre isn't likely to accept the Cupertino tech giant's request, said sources. The iPhone-maker said the expansion could create 5,000-10,000 jobs in the country. Apple has been discussing the matter with Indian authorities for months. Here's more!
No policy exemptions, tax breaks on parts imports: Officials
India wants Apple to manufacture iPhones in the country, but it said there would be no exemptions. But Apple wants India to "defer" the existing policy through which the government plans to levy more import taxes to boost domestic manufacturing under "Make in India". An official said making exceptions for Apple would defeat the purpose of an integrated policy like "Make in India".
Phased manufacturing programme for imposing more import taxes
Under a phased manufacturing programme (PMP), the Centre plans to levy import taxes on more components for pushing parts manufacturers to switch to local production. Apple reportedly sought exemption from this programme, which "may not be feasible," according to the IT Ministry. Other demands by the tech-giant, including allowing imports, exporting devices after repairs, and capital equipment incentives, would also require policy changes.
"Cannot do things that go beyond our policies"
One senior government official with knowledge about the matter stated: "We have told them, please come and invest but we cannot do things that go beyond our policies. We cannot do things only for you. They (Apple) are coming around (to our view)."
Apple currently only assembles iPhone SE in India
Though Apple is willing to expand iPhone-manufacturing in India, it is standing firm on its demand for immediate import tax relief. The disagreement between India and Apple over the matter increases the risk of delay in Apple's plan to penetrate the Indian market, where it only has a 2% market-share. A government official said: "Apple wants duty-free imports of components. India wants indigenization."
90% of components for India-made smartphones are imported
One of the reasons behind Apple's tax-relief demand is the lack of an ideal ecosystem for helping mobile component makers grow in India. Though 75% of the devices are made in India, nearly 90% of the $14-billion-worth of their mobile parts are imported, according to Counterpoint Research. To change this, the government levies 10% tax on imported parts to encourage local production of components.
Apple, partners will eventually have to comply: Counterpoint Director
Director at Counterpoint Technology Market Research, Neil Shah, stated: "It's been a chicken-and-egg problem for component suppliers whether to set up manufacturing operations in India. Apple and its partners will eventually have to comply; otherwise, Apple will always price its products at a premium."
